Phil. Export and Foreign Loan Guarantee Corp. v. V.P. Eusebio Construction Inc. (2004)
Phil. Export and Foreign Loan Guarantee Corp. v. V.P. Eusebio Construction Inc. (2004)
Phil. Export and Foreign Loan Guarantee Corp. v. V.P. Eusebio Construction Inc. (2004)
(2004)
FACTS:
HELD: YES.
No conflicts rule on essential validity of contracts is expressly provided for in our laws
o The rule followed by most legal systems, however, is that the intrinsic validity of a
contract must be governed by the lex contractus or "proper law of the contract."
This is the law voluntarily agreed upon by the parties (the lex loci voluntatis) or
the law intended by them either expressly or implicitly (the lex loci intentionis) -
none in this case
In this case, the laws of Iraq bear substantial connection to the transaction, since one of
the parties is the Iraqi Government and the place of performance is in Iraq. Hence, the
issue of whether respondent VPECI defaulted in its obligations may be determined by
the laws of Iraq. However, since that foreign law was not properly pleaded or proved, the
presumption of identity or similarity, otherwise known as the processual presumption,
comes into play. Where foreign law is not pleaded or, even if pleaded, is not proved, the
presumption is that foreign law is the same as ours
In the United States and Europe, the two rules that now seem to have emerged as
"kings of the hill" are (1) the parties may choose the governing law; and (2) in the
absence of such a choice, the applicable law is that of the State that "has the most
significant relationship to the transaction and the parties Another authority proposed that
all matters relating to the time, place, and manner of performance and valid excuses for
non-performance are determined by the law of the place of performance or lex loci
solutionis, which is useful because it is undoubtedly always connected to the contract in
a significant way
In this case, the laws of Iraq bear substantial connection to the transaction, since one of
the parties is the Iraqi Government and the place of performance is in Iraq. Hence, the
issue of whether respondent VPECI defaulted in its obligations may be determined by
the laws of Iraq. However, since that foreign law was not properly pleaded or proved, the
presumption of identity or similarity, otherwise known as the processual presumption,
comes into play. Where foreign law is not pleaded or, even if pleaded, is not proved, the
presumption is that foreign law is the same as ours
delay or the non-completion of the Project was caused by factors not imputable to the
respondent contractor such as the war in Iraq
petitioner as a guarantor is entitled to the benefit of excussion, that is, it cannot be compelled to
pay the creditor SOB unless the property of the debtor VPECI has been exhausted and all legal
remedies against the said debtor have been resorted to by the creditor. It could also set up
compensation as regards what the creditor SOB may owe the principal debtor VPECI. In this
case, however, the petitioner has clearly waived these rights and remedies by making the
payment of an obligation that was yet to be shown to be rightfully due the creditor and
demandable of the principal debtor.